Margin against markup on the same sale
Margin divides the profit by the selling price; markup divides the same profit by the cost. Sell something costing 60 for 100 and the profit is 40 — a 40% margin and a 66.7% markup, from one transaction. The error that costs money is applying a target margin as a markup: aiming for a 40% margin but adding 40% to the cost gives a price of 84, a profit of 24, and a margin of 28.6% rather than 40%.
The price each target margin needs
| 10.00% | 11.11% | $66.67 | $6.67 |
| 20.00% | 25.00% | $75.00 | $15.00 |
| 25.00% | 33.33% | $80.00 | $20.00 |
| 30.00% | 42.86% | $85.71 | $25.71 |
| 40.00% | 66.67% | $100.00 | $40.00 |
| 50.00% | 100.00% | $120.00 | $60.00 |
| 60.00% | 150.00% | $150.00 | $90.00 |
| 70.00% | 233.33% | $200.00 | $140.00 |
| 75.00% | 300.00% | $240.00 | $180.00 |
| 80.00% | 400.00% | $300.00 | $240.00 |
An estimate, not financial advice. Figures are illustrative and depend on assumptions listed below. Check anything you plan to act on with a qualified adviser or the provider itself.
The same profit, measured two ways. They track closely at the bottom and diverge without limit as margin approaches 100%.
Margin is profit over price. Markup is profit over cost. The profit is the same number in both.
Markup is always the larger figure, and the gap widens as the numbers rise: a 50% markup is a 33.3% margin, a 100% markup is a 50% margin.
Margin has a ceiling of 100% and can never reach it. Markup has no ceiling at all.
How it works
The formula
From a cost and a price:
profit = price - cost
margin = profit / price
markup = profit / cost
Setting the price from a target:
from a margin price = cost / (1 - margin)
from a markup price = cost x (1 + markup)
Converting one percentage to the other:
markup = margin / (1 - margin)
margin = markup / (1 + markup)
round = to the nearest minor unit for money,
and to two places for the percentages.
What it assumes
- One unit at full price. Discounts, returns, shrinkage and payment fees all reduce the price without reducing the cost, so they come out of the margin and are not modelled here.
- Cost means whatever you put in it. For a gross margin that is the direct cost of the goods; for a net margin it is everything. The arithmetic does not care, and the label on the answer depends on which you used.
- A margin target of 100% or more is rejected rather than clamped, because it has no solution — it needs a cost of zero or below.
- Selling below cost is allowed. It makes the profit and both percentages negative, which is correct and is a thing businesses model on purpose.
- The figures carry no currency symbol on purpose. The arithmetic is the same in pounds, euros or dollars, and the tool follows whichever currency your locale uses.
Common questions
Which one do suppliers usually quote?
Suppliers and buyers tend to talk in markup, because they are working forward from a cost they just paid. Finance and reporting use margin, because it is the share of revenue that survives and is comparable across products with different costs. The same sale is described by both, which is exactly how a target set in one gets applied in the other.
Can a margin be more than 100%?
No. Margin is the profit as a share of the price, so it approaches 100% only as the cost approaches zero and can never reach it. Markup has no such limit — an item costing 1 and sold for 100 carries a 9,900% markup and a 99% margin. That asymmetry is why the two diverge so sharply at the top.
Sources
Method written and checked by Tessalor on Jul 31, 2026.
The full method, worked example and every assumption behind this figure are on Profit Margin Calculator.